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Metrolinx backs hikes in HST, gas tax and new parking levy

Cost to average GTA household would be an estimated $477 to pay for new subway and more.

Monday May 27 is Bike to Work Day. To prepare, the Star?s Ariel Teplitsky tested out four ways to get to work ? walking, cycling, driving and taking public transit ? from his west-end home. Editing by Tannis Toohey

It will cost the average Toronto region household an additional $477 a year in taxes to overcome a generation of public transit neglect and crippling road congestion under a transit investment strategy being unveiled by Metrolinx on Monday.

The Toronto Star has learned that the provincial transportation agency is recommending a 1 per cent sales tax, 5-cent/litre gas tax, a 25-cent-per-day non-residential parking levy and a 15 per cent hike in development charges to raise just over $2 billion annually.

That’s the cost of building the Metrolinx 25-year, $50-billion Big Move transportation plan. It calls for more than triple the region’s 500 km of rapid transit to about 1,700 km and would put a transit stop within 2 km of 75 per cent of residents.

The impact on taxpayers is far less than the $1,600 a year Metrolinx estimates congestion costs the average regional household. It is also less than half the $1,000 floated recently by some local politicians.

Five years in the making, the funding plan represents “a watershed moment” for the region, said Metrolinx CEO Bruce McCuaig in an interview last week.

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He said his agency has done its best to come up with a strategy that reflects residents’ hunger for accountability and fairness in the way the money is collected and distributed. Now it’s up to the province to consider implementing the plan.

“These are difficult choices but they’re important choices,” said McCuaig, adding that he’s confident Premier Kathleen Wynne understands the urgency of the region’s mounting $6 billion-a-year congestion crisis for business and quality of life.

Without a stable, dedicated source of funding, the Toronto area’s transportation system won’t improve, he said.

“We want to get to a system that functions the way people want it to function, that gives people the time that they want both at work and at home, that gives people choices,” said McCuaig.

To ensure the new taxes are used exclusively for transit, Metrolinx is recommending the money flow to a dedicated transportation trust fund that McCuaig said “avoids year to year pressures of government budget-making.”

The province has already committed about $16 billion of the $50 billion cost of the Big Move to a “first wave” of blockbuster transit projects, including four Toronto LRTs and bus rapid transit in York Region. The new taxes would help pay for a “second wave,” including the downtown relief subway in Toronto, the electrification of some GO lines and a Hurontario LRT in Mississauga.

McCuaig confirmed that the investment strategy also proposes a mobility tax credit to protect low-income residents from the “regressive tendencies” of a 1 per cent hike to the HST. Sales taxes have been used around North America, including in Los Angeles, to help pay for transit. Metrolinx calculates the 1 per cent would add $1.3 billion to the regional pot.

It will be up to Queen’s Park to decide whether to confine that tax to the Toronto area or implement it province wide and stream the funds to local infrastructure priorities.

The variable parking levy will cost businesses 25 cents a day on average per space on all off-street, non-residential spaces, confirmed McCuaig. It would be based on the assessed value of the property “to make sure there is fairness and parity across the region,” he said.

Expected to raise about $350 million a year, it also ensures corporate participation.

In another indication that Metrolinx has been listening to the charged debates about transit funding around the region, it is also recommending a change to its own governance. It is proposing that municipal politicians be allowed to nominate six citizen appointees to the Metrolinx board. Elected officials cannot participate directly. However, the move provides for local input into how transit taxes are spent.

Metrolinx has evolved since it was created in 2006 from a planning organization, to incorporating the operation of GO Transit and building new lines such as the Eglinton-Scarborough Crosstown LRT and the UP Express to Pearson.

“It’s reasonable to expect our governance is keeping up as well,” said McCuaig.

After the Metrolinx board formally approves the investment strategy Monday, McCuaig and his staff will take it on the road to make sure regional residents and leaders understand it. But it will be up to Queen’s Park to take the next steps while its Toronto region transit agency gets back to the business of building the transit that already has funding.

“When we look around the world, what makes the Toronto region unusual is not the fact that we have challenges in terms of coming to final decisions on infrastructure. I think every city and region has those kinds of issues. But what makes us unusual is that we have a relatively incomplete way of financing and having the stability in how we fund our infrastructure,” said McCuaig.

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Metrolinx recommended revenue tools:

1% on the HST for $1.3 billion

25-cent-per-day (on average) commercial parking levy for $350 million

5-cent/litre gas tax for $330 million

15% development charge for $100 million

What the Metrolinx investment strategy will cost residents

Average cost per Ontario household: $477 a year or $9.17 per week

Average cost for a senior who doesn't drive much: $140 a year of $2.70 per week

Average cost for a student: $117 a year or $2.25 a week

Average cost for a family of five with two cars: $977 a year or $18.79 a week

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